Assume Glass Steagall is re-instated. What’s the harm for the future? Would it have prevented the meltdown all by itself? No, I don’t think so either. It may have lessened the TBTF part.
Probably the CMA and failure to regulate derivatives did a lot more. It’s not like there weren’t warning signs. I think there is not a single reg that can save us in the future. it is an ongoing job. I think there are lots of little things that can be done to slow down bubbles.
parsy, who is trying to be realistic
The Fed is currently pumping money into the carry trade, the dollar is dropping as a result as people borrow dollars and buy stupid worthless foreign currencies for the "guaranteed" return (e.g. Aussie rates are rising). That bubble will pop with very negative consequences overseas.
The Fed is pumping money into the housing market in a ridiculous attempt to reinflate that bubble. That pumping creating artificially low long term rates is helping to fund a huge debt bubble, which is mostly Federal now. That will pop and bite us very hard with long term rates overshooting to compensate. 1982 will be a picnic in comparison.
The stock market itself is in a bubble within a broader bear market. There is junk being bid up, a lot of which is related to the other bubbles (e.g. FNM, FRD). The Fed act surprised when it crashes. There are many other bubbles right now like gold and oil, they will crash and the speculators on those will have losses that ripple into the market.
None of these have anything to do with regulation or lack thereof. There is no good reason to create bubbles and there is certainly no good reason to propose regulation to control what should not be created. That regulation will inevitably stomp legitimate economic activity while letting the bubbles continue to massive proportions (part of the nature of politics and the ease of regulating what is easy to regulate).